In the Keynesian model, to understand the determination of income and employment it is necessary to understand
A. how interest rates are determined.
B. how aggregate demand is determined.
C. how long-run aggregate supply is determined.
D. how aggregate supply is determined.
Answer: B
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In the textbook model of endogenous growth, long-run output growth would decline if there were either a ________ in the saving rate or a ________ in the depreciation rate
A) rise; rise B) rise; fall C) fall; rise D) fall; fall
Answer the following statement(s) true (T) or false (F)
1. Increased taste for European goods in the United States leads to decreased demand for euros. 2. Any change in the average income of U.S. consumers will also change the equilibrium exchange rate, ceteris paribus. 3. When the dollar depreciates, this means that a dollar can buy more units of foreign currency than before. 4. If Europe experiences a higher inflation rate than does the United States, European products become less expensive to U.S. consumers. 5. Governments were unable to agree on an alternative fixed-rate approach when the Bretton Woods system collapsed.
A tax levied on purchases of a particular good or service
A) is illegal because it is discriminatory. B) always leads to a reduction in total tax revenues. C) always leads to an increase in total tax revenues. D) is an excise tax.
The effect of a tariff
A) is negligible since it applies to firms outside the nation. B) can lead to economies of scale for firms inside the nation. C) can lead to a monopoly when domestic firms become the sole suppliers inside the nation. D) will be more beneficial to large firms than to small firms.